Price Points Podcast EP 4: Maintaining Organizational Clarity around Dynamic Pricing

[00:00:09.800] - Grace

Hello and welcome to price points. The podcast presented by omni retail. I'm your host Grace Baldwin and this week we're talking about organizational Clarity and communication around dynamic pricing dynamic pricing software is a big organizational change and in our experience here in Armenia a lot of customers who are just getting started don't understand how many different parts of their organization can benefit from this institutional shift. The benefits go far beyond your pricing department and can extend as far as logistics merchandising marketing and more. The key to getting the most benefit out of a dynamic pricing software is to make sure you have the right people present for the conversations around the tool.

To explore this a bit more. I talked with one of our onboarding managers here at Omni. His name is Gijs Schuringa her or how you actually pronounce it. Courtesy of Esther de Winter who is our marketing manager, Gijs Schuringa. Many of our non Dutch customers just call him Mr. G. Born and bred in Amsterdam, Gijs started his career as a digital consultant at Magnus Red a management consultancy here in the Netherlands. He moved to Omnia in February, and has been an excellent addition to our team since. Gijs has an infectious enthusiasm for life, and there really couldn't be a better person to help our customers get started with Omnia.

Gijs and I chatted about what he thinks is important for companies going into the dynamic pricing process, how you can discover who needs to be at the table, and more. So sit back and relax and enjoy this interview with Gijs.

How are you today.

[00:01:45.680] - Gijs

[00:01:47.260] - Grace

I'm doing well. Can you tell me a little bit about who you are, how long you been at Omnia, and what exactly you do here.

[00:01:55.370] - Gijs

Yeah sure. So name is Gijs Schuringa. I have been with the Omnia since the start of February. I am the customer onboarding manager here at Omnia which basically means that I will be helping all our new customers retrieve value from our tool as soon as possible after signing contracts. That's it.

[00:02:14.270] - Grace

Today we're talking about alignment of course and is that a big part of your job. Do you have to help people align on what and get all the different parts of an organization aligned together to make dynamic pricing a success.

[00:02:27.650] - Gijs

Yeah I think it's a it's a very important part of the onboarding and this is of course not only the alignment between the business and I.T. but also within the business there is various departments that need to be aligned on what you're trying to achieve with your dynamic pricing.

Otherwise there will be unhappy departments within the organization.

[00:02:47.430] - Grace

And so what are the departments that you usually try and bring to the table.

[00:02:51.470] - Gijs

It really depends on what customer we are implementing. For example within a e-commerce pure player it's always quite easy to have all the right people in the right place.

However if we look at more traditional retailers there's often various departments that need to be aligned within the implementation to ensure everyone feels their needs are being taken into account.

The traditional organization you have big for example merchandising departments who sometimes are in charge of pricing for online on the player. There's not very often a merchandiser they are there sometimes there but it's different.

[00:03:27.860] - Grace

Why do you think clarity is. Do you consider it a vital part of dynamic pricing.

[00:03:34.070] - Gijs

Yeah I think it's really important that every part of your organization knows what you are doing because it is quite a transformation that you're going through. And if departments feel left out this could really jeopardize the long term success of your implementation.

[00:03:48.830] - Grace

So this alignment isn't something that you typically see people have already done before you get involved to before they've actually started the dynamic pricing process or is it something you really kind of coach people through.

[00:04:00.740] - Gijs

I think it needs to be present in both during the onboarding as well as during our sales cycle or even before that first alignment of course starts before you starts in the sales process. However during the sales conversations you'll probably find out stuff that you haven't thought of before so that will probably require some alignment as well. But then when we really start the actual onboarding there's a lot of things coming up that a lot of organizations do not think about beforehand and therefore often I see during the onboarding that we need to add in other people in the conversations that we hadn't thought of before.

But just to make sure that we have all the relevant information and stakeholders at the table.

[00:04:40.520] - Grace

Is there someone that you're always invited to the table that a lot of retailers or brands kind of forget about.

[00:04:45.860] - Gijs

It depends really on the organization. So for example sometimes we are at an organization that has a clear pricing department and often there the feeling is stand that there should be capability built within the pricing department. However I feel it's really important that for example your procurement team is also involved or your category management because they are also often involved in for example the purchasing and purchasing is of course an important part of your pricing. So if you don't have access to your purchasing prices for example or your logistic prices your marketing costs these are all things that you want to take into account when setting your price.

So therefore it's really important that all these different people are aligned so that we know what to take into account in our dynamic pricing capability.

[00:05:30.380] - Grace

What happens if there's not this alignment. Have you ever experienced that?

[00:05:33.830] - Gijs

So far I have not because I think before we go live at our customers you'll see that they do some testing and also a line within their companies to see whether these test results actually make sense and during the testing we often stumble across things and departments that we haven't thought about. And then they get involved and then the strategy gets adjusted accordingly so that before we go live we have all the people at the right place

[00:06:00.290] - Grace

Happy and enjoying it getting the most out of it.

[00:06:02.940] - Gijs

Exactly.

[00:06:03.980] - Grace

So within onboarding there's a couple of different meetings right now. And so you invite people in so you have all the stakeholders present at that meeting. Is that the only time that everybody's in the same room or is it the only time you facilitated or is do you want that alignment to continue outside of the workshops.

[00:06:20.210] - Gijs

I think it's more important even outside the workshops. Of course it's important that they are in the workshop. However most of the testing and getting familiar with the tool and the pricing strategy is happening outside these workshops. So what I always suggest my customers is to have sessions internally where they test and go through the tool and understand really what is happening under the hood and also after the implementation. This alignment needs to continually be present throughout your organization because if you only align during the implementation and then tool arrives in a silo again any changes that happen within your strategy will not be understood by your colleagues and then you have misalignment again.

So yeah it's really not only a tool for implementation but really a business change or transformation so to say so I guess implementing that in pricing means you transform the way you work from that point onwards.

[00:07:16.170] - Grace

And do you feel. Do you ever experience some sort of resistance to that or now do you think. Do you feel feel like people are afraid to change how they're working?

[00:07:25.960] - Gijs

I think for a lot of organizations there is a little bit of hesitancy to start with dynamic pricing. They might feel that they will be out of control and that there is an algorithm deciding what's happening and they won't be able to understand why or what. And this is also one of the reasons that we in I have a Show Me Why button which all users can always press and it will show you on the product level how certain price has been decided. I think that's quite important. What you also see in terms of resistance is if you don't align beforehand. For example if you were omnichannel retailer and the online departments want to implement dynamic pricing you can then stumble across the fact that you won't be able to update your prices in the physical shops as fast as you would want to. And then this could lead to a lot of resistance within the offline departments which in traditional retailers are often also the powerful departments.

This can really hinder the process of implementing that in pricing.

[00:08:27.520] - Grace

And so in that example what do you then advise are ESLs.

[[00:08:31.810] - Gijs

Yeah. Yeah it could be an option for these retailers however for example if you're a fashion retailer it's quite hard to implement ESLs. Another option would be to for example only reprice once or twice or three times a week only in the evening. Another question you could ask yourself is do we per say when to have the same prices in-store as on this website that's a strategic choice you need to make as a retailer. Another option that we saw and one of our customers was that they said with our dynamic pricing in the stores we just have the recommended retail price on the price tag.

And if due to our dynamic pricing prices would have been lowered then at the cash register they'll have a lower price. So that will need to price them and make them even more happy customers.

[00:09:21.580] - Grace

But they don't do it if like their online price is higher? They'll just they'll cap it in-store at the recommended retail price?

[00:09:28.810] - Gijs

Yeah. And online often as well. So the price on the price tag is the maximum price product could be at. And if you're lucky at the cash register you'll find out that you even have to pay less.

[00:09:38.320] - Grace

I wonder that if consumers then know that they're checking the prices in stores probably right.

[00:09:43.880] - Gijs

I think nowadays consumers in store check the prices. Like if you're somewhere and somebody see a pair of sneakers for on the euros and you check online and you can see okay I can get them for 90 euros here.

That's a 10 percent difference. That makes sense to them. Get them online. But if you then in the store hear, "Yes. But our online price you also pay here. However we can do updated that frequently. But we will always give you our best price." That also creates customer satisfaction.

[00:10:11.960] - Grace

And so then coming to a strategic choice like that that comes from having the offline department also in these conversations about your dynamic pricing. Right

[[00:10:20.890] - Gijs

Yeah.

[00:10:21.740] - Grace

So what happens when everyone is aligned?

[00:10:26.710] - Gijs

I think when everyone is aligned you get strategies that maybe without aligning you wouldn't have kind of. So by having all the different departments thinking about your pricing strategy and really looking at how we can get most out of the dynamic pricing tooling. Yeah that really works well for an example of this is when retailers add in stock levels. So for example in logistics departments join in the conversation. They say OK if we know this beforehand then we can add in our stock levels in our pricing strategy and prevent from having to go into the end of the season sale.

But already throughout the season taking into account stock coverage and stock levels dynamically price based on that throughout the season and in the end have a higher margin on your SKUs.

[00:11:11.920] - Grace

So by that you mean instead of waiting until the end and then you have this huge surplus, you can follow the market a little bit more and maybe price a little bit more competitively to sell more throughout the season and earn higher margins than just doing one big bulk clearance sale.

[00:11:26.500] - Gijs

Yeah exactly. So what you see in traditional retail a lot is that throughout the season price stays the same. And then at one point you go into sale and you immediately go into 30 or 50 percent discount. If you were to reprice based on your sales volume and your stock levels you could also already throughout the season maybe drop a little bit in price, be most competitive in your market, and then already make sure that you don't have to go into the deep end of the season sale. But these are things that really you need alignment between the different departments to come up with these kind of thing.

[00:12:02.710] - Grace

So in that example what are the different departments that would align? So your pricing, marketing,

[00:12:06.740] - Gijs

Yeah logistics is quite important in this one. Yes. And also of course our team because it's for some companies quite hard to feed these kind of data to. Yeah. So it's very important to have I.T. involved from the start to make sure everything we want is also technically possible.

[00:12:25.360] - Grace

So how can organizations actually like what does a practical way that organizations can maintain clarity or other dynamic pricing and make sure that it's a success.

[00:12:34.780] - Gijs

I think it's good to keep everyone up to date when you do any pricing strategy update. So whenever anything changes in your settings you communicate that throughout your organization so that everyone knows okay we're going a different direction now. If you're going to become more margin focused then rather than sales volume focus is important for everyone to understand that is happening.

[00:12:54.730] - Grace

So within that to do that. Do you then do people set up like a slack channel or how do you see people do that actually?

[00:13:02.140] - Gijs

Yeah I think sometimes it could be as simple as a slack channel in other organizations. It's more often like soap boxing events during like a monthly updates. Okay. Our pricing strategy has changed. We're now moving into this and that. Yeah. There's various examples I think really.

[00:13:18.250] - Grace

How frequently will these changes be announced?

[00:13:20.380] - Gijs

Looking at our customers the larger enterprise for example the D2C markets often don't change their strategy that much whereas small e-commerce players tend to test a bit more and play around with it. So therefore in a small store a Slack channel would be more appropriate.

[00:13:37.480] - Grace

I guess that's kind of a cool thing about software like Omnia is that you can really make it your own right?

[00:13:42.500] - Gijs

Yep. Yes. So what what we always say during the onboarding is it's not that once you implement Omnia, it will manage your prices and you don't have to look at it anymore. We challenge you to look at the results, evaluate, internally align between departments, see whether you can optimize your strategy, and test and see how you can continuously optimize your settings and your setup and taking into account that your competitors are probably also using dynamic pricing. You probably have to react to their strategy as well and that is also an ever evolving process.

So therefore Yeah it never stops. However there is a shift going from manually repricing your products according to your strategy towards really focusing on how can we have the best strategy and for that of course you will need a lot of alignment within your company.

[00:14:35.020] - Grace

And you also need something to take care of the strategy for you right. Because you can't do the strategy and the manually updating it.

[00:15:04.570] - Grace

So then my last question for you, Gijs, is do if you have what are your practical tips for really making dynamic pricing a success from the start and for making sure that everybody is online in your organization.

[00:15:20.620] - Gijs

Yeah. So my first suggestion would be to really start aligning the topic as soon as possible. I would say preferably even before you start looking at what different vendors are out there so that you have you're sure what you're looking for because there is quite a difference in the vendors. And if you were looking for a particular strategy it might be worth already knowing that before selecting your vendor.

Another thing what I would always suggest is if there is any unclarity on what you want to achieve, hire a consultant. Dynamic pricing goes really really goes down to the foundation of your business. And therefore I think it would make sense to hire a consultant who could help you out direct your thinking and getting the right people at the table.

Lastly I would say whilst you're implementing that pricing already start thinking about how you're going to integrate this within your running processes and how you are going to communicate throughout your company around the topic.

[00:16:15.610] - Grace

Excellent. All right. Well thank you for talking with me. That was a pleasure. If people want to reach out to you what's the best way to talk.

Feel free to add me on LinkedIn or send me an email as I said only a retail dot com call I will put that in the show notes because if you're like me you can't pronounce. It's helpful to see it. So. Sure. Awesome. Thanks guys.

Thanks for listening to price points. If you'd like to get in touch a case feel free to send him an email or reach out on Lipton. I'll include his information the show notes because it's probably easier than just listening to me say his name again. If you liked the podcast let us know. I would love if you sent me an email at Grace at the retail dot com to share your thoughts. I'll also include that information in the show notes.

In the meantime though I hope you have a great rest of your day.